A quasi-endowed fund was designed for people and organizations that want to enjoy the excitement of giving larger grants now along with the benefit of investing for future growth. These funds are invested in the markets to keep them growing, but there’s no limit on the amount that can be granted from your fund to the organizations you choose. A quasi-endowment requires a $100,000 minimum to start and the balance must remain above $50,000 for the first three years.

Download this one-pager to learn more about about how a quasi-endowment works. 

A recent example of a quasi-endowment in action is held by Habitat for Humanity of Central Arkansas. Like many other nonprofits, Habitat relies heavily on annual giving and donations of all sizes year-round from their donors, but the use of a quasi-endowment allows them to access funds for emergency use and for special initiatives to boost their impact. The pandemic proved a prime example of this. It showed Habitat (and many nonprofits) the importance of growing and maintaining a strong reserve.

“Just like our homeowners must save for the closing costs of their new home, we must save for when a once-in-a lifetime opportunity presents itself to us as well,” said Kelly Fleming, executive director of Habitat for Humanity of Central Arkansas.

Because of a quasi-endowment, Habitat is able to have an impact now, and preserve funds for future use.

In addition to quasi-endowments, the Community Foundation helps donors manage three types of funds depending on the amount they want to donate, desired impact and time horizon. Learn more about the multiple ways to give here.

It doesn’t take long to start enjoying yourself when talking to Nicole and Darrin Williams. Darrin, a Little Rock native and Central High alumnus who serves as CEO for Southern Bancorp, and his wife, Nicole, are fundholders with Arkansas Community Foundation. They opened the Nicole and Darrin Williams Family Charitable Endowment in June 2020 to help ensure their legacy of giving and leadership.

The Williams are attorneys who met at Vanderbilt Law School. Currently living in Little Rock, they raised their children, DJ and Payton, in central Arkansas. DJ and Payton attended Central High and are now enrolled at Wake Forest University in Winston Salem, NC and Spelman College in Atlanta, GA respectively.  Darrin is a founding board member of the Little Rock Central High Tiger Foundation, and the whole family boasts Tiger pride: Nicole was PTSA president while her kids were enrolled there, and Darrin was student-body president in 1986.

Public service and the idea of “giving back” is a deeply rooted tradition for the couple. Darrin has a distinguished resume of public service and volunteerism. He served on the Little Rock Planning Commission, in the Arkansas General Assembly and currently serves on the boards of Arkansas Children’s Hospital and Hendrix College. Adopted by a minister and schoolteacher, his most formative years taught him that “giving back is just what you do.” Growing up “there was never a day that we ate alone as a family. My parents always welcomed people in need for meals and any other help they could provide. They modeled that for me,” he said.

Nicole has similar roots. Her father, a former IBM executive and entrepreneur, has served on the boards of more than 30 community organizations, and her mother has been a full-time volunteer for many service and civic organizations and her church’s Christian education department.

“It was important to Darrin and me that we raise our children to give back. When they were eight years old, we started a tradition to help foster that spirit of giving. Instead of birthday parties where everyone brought a gift for our kids, we would buy them one big thing, and then ask their party guests to donate to a local charity of our children’s choice. DJ first chose Heifer International and Payton selected the Humane Society when she turned eight. Each year they had fun choosing different local charities to support,” said Nicole. “We always had three jars for the kids: church jar, savings jar and spend jar. 10% to the church, 20% in savings and the rest you could spend. Now that the kids are in college, they are mostly continuing this principle, and now they truly see the value in financial management and planning their charity.”

Nicole is a board member with the Tiger Foundation, a sustaining member of the Junior League and a member of Alpha Kappa Alpha Sorority, an organization dedicated to sisterhood and service. Nicole is also actively involved with the local chapter of The Links, Inc. Links Inc. is a great way to give back to the community. The organization is approximately 75 years old. Founded and led by Black women, we award scholarships, promote cultural activities and events and expose children to art, STEM topics, healthcare information and more,” Nicole said.

“More than anything, though, our faith guides us,” said Darrin. “When Nicole and I first started dating while at Vanderbilt, we would attend church together on Sundays. Those were our first dates! Thankfully, our faith has shaped our marriage, guided our parenting and can hopefully be felt in any community leadership where we are involved. We attribute any accomplishments in life to our faith.”

When asked why they started their fund at Arkansas Community Foundation, Darrin and Nicole said at the same time, “We wish we’d done this sooner!” They are working on a legacy of faith and having fun, while giving back to the causes they care about.

“We are so grateful for the work of the Foundation. If I could offer any advice to someone exploring charitable giving or starting to build a legacy, I’d say ‘don’t wait.’ It is liberating and incredibly fulfilling to have opened a fund. The Foundation makes it easy and gratifying.”

During a routine check-in meeting, your client casually mentions that their employer, a local company, was just acquired. The client and dozens of fellow employee shareholders are now flush with cash. “I’d like to use some of the money to give to charity,” the client tells you. “Let’s talk about a family fund at the Community Foundation.”

You try not to flinch as you mentally calculate the capital gains taxes your client could have avoided if the client had given some of those shares to a fund at the Community Foundation years ago when the company was clearly growing fast, making it a natural target for acquisition or IPO, but well before an exit was in the works.  

All is not lost. You can still help the client establish a donor-advised, field-of-interest, unrestricted, or other type of fund at the Community Foundation to fulfill the client’s charitable intentions. The client’s gifts to the fund qualify for a charitable tax deduction in the current tax year, helping to offset the income from the sale of the shares.  

Still, this situation is all too common and a good reason to regularly remind clients about their options for making gifts to charity and the tax benefits of each.

Giving cash to a public charity, which is what your client in this situation will be doing (!), is always a viable option. The general rule is that your client can deduct cash gifts to up to 60% of their adjusted gross income (AGI) in any given year. While this may not completely offset large gains from the sale of the stock, it will help to reduce the client’s taxable income.

Giving appreciated stock, which is what you wish your client had done, is a very tax-effective method of supporting public charities. Clients who donate stock outright avoid all capital gains tax that would be levied on a sale of the stock if it were sold prior to making the donation. Even with the 30 percent of AGI limitation imposed on gifts of highly-appreciated, long-term capital gains property to a public charity, your client likely will still come out ahead because the client’s AGI is presumably a lot lower than it will be in the year of a future stock sale. 

For easy future reference: download and save our handy guide which details the AGI limitations on cash and stock gifts.

Despite cautionary tales most Americans do not have a will. Even those clients who do have estate plans in place may not truly understand the difference between a will and a trust (and the reason they still need a will even if they have a revocable living trust). A client also may not understand that a charitable bequest can be part of an estate plan whether the client’s main estate planning vehicle is a will or whether it is a trust. 

Of the $485 billion given to charity by Americans in 2021, according to Giving USA, 9.5% of that giving came from bequests–that’s $46 billion. Giving USA’s data visualization tool illustrates the ebbs and flows of bequest giving, which has long been a significant component of philanthropy. 

Research reveals fascinating psychological factors behind a person’s decision to leave a bequest, which helps to understand the motivation for leaving a gift to a charitable organization in a will or trust. Not surprisingly, altruism has long been one of those factors. Bequests to charity are not a new idea. Examples of high profile estate gifts date back centuries. Some of your clients may be familiar with the bequests of Benjamin Franklin, who established testamentary charitable trusts dedicated to supporting Boston and Philadelphia tradesmen, and George Washington, who left bequests in his will to colleges and trade schools.

Our team welcomes the opportunity to work with your clients to establish bequests to your clients’ funds at the Community Foundation through a will or trust or through a beneficiary designation on a qualified retirement plan or life insurance policy, including providing you with proper bequest language to ensure alignment with your client’s intentions. As we approach the fourth quarter, now is also a good time to remind your clients that bequests of qualified retirement plans can be extremely tax-efficient. Funds flowing directly to a client’s fund at the Community Foundation from a retirement plan after the client’s death will not be subject to income tax or estate tax. 

We look forward to working with you to establish your clients’ philanthropic legacies. 

The Community Foundation has a history of strong board leadership. Don Greenland, vice chairman of The Nabholz Group and leadership coach for Nabholz Construction Services, is no exception. Don completed his term as Community Foundation State Board chair in 2022, and we are so grateful for his leadership and service to the Foundation. He and Angela, his wife of almost 39 years, established the Greenland Family Charitable Endowment with Community Foundation of Faulkner County. They’ve lived in Conway since 1985.

We are excited to get to know Don better with our new Q&A series to shine a light on important contributors to the Community Foundation:

What is your favorite nonprofit in Arkansas and what drew you to their mission?  How did you hear about them?

I have a heart for serving the marginalized in my community (hungry, homeless, etc.). Through my personal volunteerism, and my seat on the local affiliate board of the Community Foundation, I learned about some wonderful local organizations that are addressing these issues. Bethlehem House, The Conway Ministry Center, and City of Hope Outreach (CoHo), are some of my favorites. They share a common mission to work with at-risk individuals and families to keep them from becoming hungry and homeless.

How did you get involved in charitable giving?  How did you get involved with the Arkansas Community Foundation?

I give credit to my parents. They were wonderful examples of charitable giving and volunteerism. Growing up, they would involve me and my sister in numerous projects and events supporting causes they cared about. So I guess it is hardwired in my DNA.

My involvement with Arkansas Community Foundation is a longer story. My wife also had generous parents. So as young parents, we were seeking a way to teach and involve our children in charitable giving. One of my business associates had recently created a family foundation for similar purposes. I was about to hire a lawyer and CPA to form our foundation when Charles Nabholz (his office was next to mine) told me about this thing called a “community foundation”. After a quick meeting with the local Executive Director, and a few pages of paperwork, the Greenland Family Charitable Endowment was born! I immediately became a fan of the Community Foundation. Months later, I was asked to serve on the local affiliate board. My answer was an easy YES. I remain a member of this wonderful board to this day.

What did serving as the Chair of the Foundation Board teach you?

I have learned so much serving on the Foundation Board. I have benefited greatly from the shared personal experiences of my fellow board members, all amazing people. From the wonderful leadership and staff of the Foundation, I learned how to have more positive impact on issues I care about (a.k.a. smart giving). I learned about “SMIRF”: using 5 forms of philanthropic capital to increase impact:  Social, Moral, Intellectual, Reputational, and Financial. I could go on and on…

What inspires you to give?

First and foremost, as a man of faith I am called to love and serve my neighbors. As one of the most blessed people on the planet, I know my circumstances are the result of God’s grace, others helping me, and being a part of a thriving community. Out of gratitude, I am a very cheerful giver!

What do you enjoy doing in your spare time?

I really enjoy working with my hands and tools on service projects. I get to work with some local handymen doing home repairs, handicap ramps, and helping local nonprofits with their facility needs. I take two or three mission trips each year doing the same thing. I still play the drums with the local classic rock band “Yesteryear” and play in the contemporary Christian group with my wife and daughter for weekly church services. I’ll also do a little hunting and fishing with friends, and my wife and I are enjoying more travel together.

What has been your most valuable lesson in life?

Two lessons that resonate with me that I like to share with others. First, everyone matters. Second, there is no such thing as “time management”. You make time for what is important to you.

What question do you wish you got asked more?

“Why are you so happy and positive all the time?”

If you had a chance to have a meal or conversation with someone, living or dead, who would it be? Why?

I love to eat, so I would have a meal with just about anyone😊. As a Catholic man of faith, my dream conversation would be with Jesus, Pope Francis, and Mother Theresa. They would certainly inspire me to strive much harder for a life of significance and service to others!

Don was born in Portland, Oregon and move to McGehee, Arkansas when he was eight years old. At the age of 12, his family moved to Stuttgart where he graduated from Stuttgart High School.

Don and Angela have two children. His daughter, Megan Greenland Williams, is the Vice President of Associated Builders and Contractors of Arkansas and recently married to Drew Williams (No grandkids yet!). Their son, Carter Greenland is a CDL Driver & Equipment Operator for Nabholz Civil Group in Northwest Arkansas and part-time Real Estate Agent for Coldwell Banker.

Survey of hospitals shows the impact of COVID-19 on the financial health of hospitals in 2021

LITTLE ROCK, AR (August 9, 2022) – A recent financial survey conducted by the Arkansas Hospital Association shows that the COVID-19 pandemic continues to create profound financial volatility for the state’s hospitals. On average, hospitals responding to the survey saw a total margin decrease of 3.5 percentage points between the first quarter of 2019, prior to the pandemic, and the first quarter of 2022, leaving a full 52 percent of respondents now in the red. This sustained financial squeeze could result in diminished access to care for Arkansans.

“The survey certainly paints a bleak picture for Arkansas hospitals’ finances,” Arkansas Hospital Association President & CEO Bo Ryall commented. “The fact that about half of the facilities who responded are now operating on negative margins should be a major cause for concern for all of us. In many of our communities, the hospital is the largest employer, and 40 Arkansas counties are served by a single hospital. Without a hospital, the most vulnerable residents – often the elderly and those living in poverty – may find their access to health care severely limited.

“The people who work in our hospitals are remarkably strong,” Ryall continued, “and our hospital leaders are equally motivated by their shared mission to provide care to the people of our state. It is because of their vision and commitment that I’m confident we can navigate our way through this difficult time. But hospitals won’t be able to do it alone; it will require all of us to recognize the crucial role they play as both the heart of the health care system and a major driver of the state’s economy. Unless hospitals receive additional assistance from state and federal government, we will see more reductions in services and possibly even closures.”

It is difficult to overstate the environment of uncertainty within which hospitals have had to make clinical, operational, and financial decisions throughout the pandemic. Unlike other industries, hospitals cannot just raise their prices; they are primarily paid by Medicare, Medicaid, and negotiated contracts with commercial insurers. Before COVID-19, Arkansas hospitals faced downward revenue pressure from payers, and many were operating on slim – and, in some cases, negative – margins. Since the beginning of the pandemic, hospital expenses have increased more rapidly than revenues. As demand spiked and many health care workers were pulled away by lucrative jobs elsewhere, total hospital staffing vacancies skyrocketed, leaving facilities throughout the state reliant on expensive contract labor to maintain a safe and effective environment for patients and employees. Even as COVID-19 cases ebbed during the spring, the survey shows that inflationary pressures increased, further exacerbating the financial situation in hospitals.

Hospitals are cornerstones of Arkansas communities, and the risks they now face highlight the need for policy, legislative, and regulatory approaches to support and strengthen the health care system.

# # # 

The Arkansas Hospital Association has 106 member hospitals that serve Arkansans living in cities, towns, and communities located throughout the state. For more than 90 years, the association’s leadership has focused on advocacy that promotes initiatives to improve health care access, quality, value, service, and safety. In partnership with our members and stakeholders, the association also provides resources, builds alliances, and develops services that support Arkansas hospitals, as they strive to deliver superior health care to all Arkansans.

Arkansas Community Foundation made a grant from the Lindsey East Endowment as part of the Access to Local Foods program. This grant supports the Center for Arkansas Farms and Food and Arkansas Food Innovation Center (both programs of the University of Arkansas) by providing funds to teach undergraduate interns how to create value-added foods from surplus produce grown at the Center for Arkansas Farm and Food.

The Arkansas Food Innovation Center is a commercial food production facility that helps farmers and food entrepreneurs bring their products to market. One of the pain-points these two programs have been working to address is how to help farmers find alternative uses for their unsold or second-grade (edible but ugly) produce so they don’t lose revenue. Creating “value-added” foods (for example, turning tomatoes in to sauce or berries into jam) is one such solution.

The Center for Arkansas Farm and Food is a teaching farm that offers experiential learning programs for beginning farmers and experienced farmers who want to expand their knowledge or markets. The goal is to increase the number of thriving farms and farmers in Arkansas, particularly those growing vegetables and specialty produce.

The grant enabled the Food Innovation Center to hire student interns for an experiential learning program that would help them understand the process of creating and marketing value-added foods from start to finish.

The Food Innovation Center prepared a video that shows all the complexity that goes into creating tomato sauce from surplus produce:

To learn more about this program, visit Center for Arkansas Farm and Food and Arkansas Food Innovation Center.

Retirement planning is an important discussion topic during client meetings every year. In recent months, though, you may have observed an uptick in clients’ questions about their plans for retirement related to: 

–Required minimum distributions (“RMDs”) from qualified retirement plans, including questions prompted by media coverage of pending legislation known as SECURE 2.0; 

–Stability of retirement investments, a topic that is widely covered in mainstream financial news; and 

–Rising interest rates and what that means for retirement, which is also a frequent topic in the media, along with inflation’s impact on retirees.   

Against this backdrop, the issues become particularly complex for philanthropic clients. Here are answers to questions you may be asking:

What’s going on with updates to the charitable giving components proposed in the SECURE 2.0 Act? 

Right now, SECURE 2.0 includes a provision that would index the $100,000 Qualified Charitable Distribution (“QCD”) allowance for inflation and also expand the technique to allow for a one-time transfer of $50,000 to a charitable remainder trust or other split-interest vehicle. But those enhancements are not the law, yet. Overall, the legislation appears to stand a good chance of becoming law. Still, a lot can happen as the House and Senate reconcile their respective bills before the legislation heads to President Biden for signature.  

What should I be telling my clients about the potential changes to the Qualified Charitable Distribution rules? Or should I say nothing? 

For clients who are seriously considering a QCD, it may be worth mentioning these potential enhancements. But in general, it’s usually more confusing than helpful to bring up pending legislation, no matter how exciting. Instead, consider placing your focus on the QCD rules as they currently stand. The QCD already is a strong planning tool. 

When should I reach out to the Community Foundation for help with QCDs? 

The answer is. . . anytime! The Community Foundation can help establish a qualifying fund to receive your client’s Qualified Charitable Distribution, regardless of whether the SECURE 2.0 enhancements become law. Please don’t hesitate to call on us anytime we can be of assistance.  

Advisors frequently comment that they’re surprised to discover the many ways the Community Foundation can help their clients, especially compared with national donor-advised fund programs affiliated with brokerage houses or financial services firms. Here are three examples of the types of comments community foundations have heard over the years from attorneys, accountants, and financial advisors: 

“I didn’t realize that the Community Foundation’s donor-advised fund offering was so much more than just an online account. My clients have loved getting to know other donors, accessing first-hand knowledge about what’s going on in the community and how their favorite charities are making a difference, and being able to involve their children in philanthropic events and activities.” 

“By partnering with the Community Foundation, we utilize our expertise to focus on investing our clients’ assets, and the staff at the Foundation provides clients with their expertise in the philanthropic arena. We consider the Community Foundation a key partner in our team approach to serving our clients.”  

“I’m amazed at the variety of funds the Community Foundation can administer. Many of my clients have established donor-advised funds and have also augmented their philanthropic planning with a specialized fund such as a scholarship fund, designated fund, or field-of-interest fund. A big bonus for my retirement-age clients is that the IRS allows the community foundation to receive a Qualified Charitable Distribution from a client’s IRA and place it into one of these specialized funds.”  

“My clients who sit on boards of directors of start-up charities have been so happy that grants from donor-advised funds–their own and others’–count toward the IRS’s public support test. That’s really helped new organizations in our community get off the ground.” 

Your clients will arrive in 15 minutes. You’re reviewing the file. Everything is in order. The estate planning documents are up to date, you’re ready to share the latest investment results, and you are prepared to debrief the 2021 tax season and make tax planning recommendations for the remainder of this year. It sounds pretty typical up to this point, right?

As you continue to scroll through the materials, you see the names of several charitable organizations that your clients have supported every year for at least a decade. Ah ha! This is an opportunity to add even more value to your clients.

Easy for a busy advisor to overlook, charitable giving habits are actually an important window into helping a client make planning decisions around their philanthropic intentions. 

Here’s a simple playbook to guide you through a client conversation to begin establishing a charitable giving plan using a donor-advised fund at the community foundation. 

–Call your clients’ attention to their charitable giving history. They might not even be aware of how much they are giving or how long they’ve been supporting their favorite charities.  

–Gather more information about why the clients support those particular causes. Family tradition? Past involvement as a beneficiary of an organization’s services? Desire to impact a particular area of need? 

 –Talk with your clients about their community involvement. Do they serve on any boards of directors? Do they volunteer at local organizations? 

–Review any charitable giving provisions in the current will or trust. Are the clients leaving a bequest to favorite charities?    

–Ask your clients if they’ve ever considered organizing their giving through a donor-advised fund. If they are not familiar with donor-advised funds, perhaps offer a quick primer, and certainly offer to introduce the client to a member of the Community Foundation team. 

–Briefly mention that a donor-advised fund can be an effective alternative to a private foundation, thanks to fewer expenses to establish and maintain, maximum tax benefits (higher AGI limitations and fair market valuation for contributing hard-to-value assets), no excise taxes, and confidentiality (including the ability to grant anonymously to charities). 

–Also mention that a donor-advised fund at the Community Foundation is frequently a more effective choice than a commercial gift fund offered through a large commercial brokerage firm. That’s because, at a community foundation, the donor is part of a community of giving and has opportunities to collaborate with other donors who share similar interests. In addition, the donor is supported in strategic grant making, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference.